A Note on the Legal System

Dave SchulerJanuary 12, 2013

Recently, in both the professional journals of opinion and the blogosphere I’ve noticed arguments that are highly dependent on extremely narrow readings of federal law, often hinging on grammatical or stylistic errors. I was particularly shocked, for example, to read an article by Laurence Tribe on the likely constitutionality of a trillion dollar platinum coin. There was another article (I’ve forgotten the author’s name) whose argument hinged on the punctuation of the Second Amendment.

The problem with these analyses is that our legal system just doesn’t work that way. We have a common law system in which judges interpret the law every day. Their interpretations generally don’t hinge on punctuation. That might be the case in other legal systems but not ours. If laws were being interpreted that strictly our society would have collapsed a century ago.

In the particular case of the trillion dollar platinum coin, the law that people have been reading is a law about bullion coins. “Bullion coins” are coins sold, whatever their face value, for amounts based on the actual value of the metal from which they’re made. The one ounce American Gold Eagle, for example, has a face value of $50 and today sells for around $1,700, based on the value of the gold that’s in it. In my view the intent of Congress can reasonably be inferred from the law and its intent was not to empower the Treasury to mint a one ounce $1 trillion platinum coin. Astonishingly, Professor Tribe apparently thinks otherwise.

Could the Treasury mint a one ounce platinum coin with a face value of $1 trillion under present law? Would it? Would the courts uphold its use with a value of $1 trillion in payment of the bills that Congress is racking up? I don’t know the answer to any of those questions but I suspect that the answer to all of them is “No”.

A similar situation would be lawyers from one state giving an analysis of another state’s laws by just reading. Each network has its “go-to” legal talking heads, and I understand they cannot have an expert for every aspect of law. I would be satisfied with a disclaimer.

I’ve not read much of the platinum coin debate, but from what I’ve read of the advocates; arguments, they suffer from a failure to discern the forest by focussing on a single tree. One of the larger, more important Constitutinoal issues are how to limit the executive’s plenary powers, which aren’t conditioned on Congressional approval. Subjects like war and peace and the unitary executive. The answer given is Congress retains the power of the purse, which was the chokepoint that our British forebears thought was the fundamental source of the rights of Englishmen to be free that distinguished them from other peoples.

If you look at the overall framework of the system and see that Congress has placed a clear limit on executive spending, it becomes more difficult to accept an interpretation that there is a loophole that should be given effect to bypass it.

The one ounce American Gold Eagle, for example, has a face value of $50 and today sells for around $1,700, based on the value of the gold that’s in it.

In the numismatic world of coins, the value of an American Gold Eagle would also be determined by it’s condition and rarity (how many were originally minted and how many known remain). Also, some mints seem to be more popular than others, such as coins with the ‘Carson’ mint mark. Currently, gold dealers are all saying the same, that there is an exceedingly high demand for gold coins. They are being bid up and inventories are shrinking.

One can only assume that people are seeing the abuse of our dollar, through the Fed’s quantitative easing decisions and other unworthy fiscal policies (Fiscal Cliff comedy), and no longer trust that it’s value will hold.

I guess I wasn’t clear enough in what I was writing. I was writing about the price that the Mint asks for the coin. Needless to say, those coins are in mint condition.

You were clear Dave. I was just adding a little embroidery to the discussion of gold coins, which is why I started with, “In the numismatic world…” Apologies for straying from your original intent.

Getting back to the trillion dollar issue, though….

Here’s another perspective about the trillion dollar coin idea, given by Steven Hayward of the Power Line Blog.

4. We should be for the $1 trillion coin idea. Here’s why: Lots of people say that even if legal, the markets would react very adversely to adding another trillion dollars to our debt in this way. But why should the markets feel any better if we add another trillion dollars to our debt by a vote of Congress? The trillion dollar coin gambit would clarify that we’re nowhere close to getting serious about our debt crisis. Better if the markets speed up the moment of reckoning with some stern signals now. (This item, by the way, is not a joke.)

The problem with all these gimmicks is that they aren’t solutions. Unless we plan to continually mint $1 trillion coins, then all this is is a temporary delaying action by the Democrats in the hope they can get a better political deal in the future. It’s pretty amazing the things they are willing to accept (see PD’s comments) for a tactical political advantage that might not materialize.